China puts restrictions on Nvidia following moves by Trump administration
Following comments by US Secretary of Commerce Howard Lutnick in July, Chinese authorities have stepped up efforts to encourage domestic tech companies to use locally produced chips instead of American Nvidia products. Lutnick’s statement, which suggested limiting the technological power of China, was seen as disrespectful by senior Chinese officials. This led to regulatory pressure on companies like Alibaba and ByteDance to reduce or cancel their orders for Nvidia’s H20 processors, a chip specifically designed for the Chinese market due to US-imposed export restrictions.
Despite arguments from Chinese tech giants that their AI initiatives heavily rely on Nvidia’s processing power, regulators continue to advocate for the use of alternatives developed by domestic companies such as Huawei Technologies and Cambricon. While some companies have started using these self-developed chips for inference tasks, they still depend on Nvidia hardware for training due to performance differences.
Lutnick’s remarks have served as further justification for Chinese regulators to push for greater use of domestically produced technology. The Cyberspace Administration of China (CAC) has reportedly issued informal guidelines urging tech groups to hold off on new orders with Nvidia and has even summoned Nvidia executives over alleged security concerns about possible remote shutdown capabilities – a claim Nvidia strongly denies.
Despite this pressure, other Chinese ministries maintained a welcoming attitude toward Nvidia CEO Jensen Huang during his visit in July. Nvidia defended its position, emphasising that the H20 is not intended for military use or government infrastructure and that allowing American chips for commercial use benefits all parties involved. China is a key market for Nvidia, accounting for about 13% of revenue in fiscal year 2024.
In response to the current situation, Nvidia is preparing to launch a new ‘China Ready’ Blackwell chip, the B30A, in September. This chip is intended to deliver better performance than the H20 while still complying with US export regulations.
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